Blog Post

iTMS Variable Pricing

The New York Post is reporting the record labels can’t convince Stonewall Jobs to use variable pricing in the iTunes Music Store.
The companies (refering to the recording agencies) all charge different wholesale prices – roughly between 60 cents and 80 cents a track – but within each company the prices are the same. Now they have said they want variable pricing – the ability to charge less for some tracks and more for others – something Jobs has resisted because he wants to maintain the standard 99 cents-per-track retail price.

But Jobs has dug in his heels on the issue, creating the potential for a showdown between the mercurial Apple boss and the record industry should the labels continue to push for variable pricing.

I really do hope it stays where it is now. There is still a huge area for growth and it is still too early for change. The only advantage variable pricing has is on crappy music being cheaper and popular songs priced over a dollar. When Steve Jobs announced iTunes, he said he had a feeling that people would buy downloaded songs individually at a buck. That seems to be the case given the statistics the music store produces. Why mess with something that isn’t broken?

5 Responses to “iTMS Variable Pricing”

  1. Lordmike

    iTMS would never had reached 1 billion sold songs if they had roller coaster prices. Companies which uses the roller coaster method aren’t even close to iTMS when it comes to sold songs. 99cents is perfect for a song!

  2. 99c is perfect/ keep it simple *****. APL is a marketing genius, the record labels are out to lunch with too many martinis. In fact it just occurs to me that most record labels are on their way to dinosaur land.

  3. Yeah I think Jobs is doing great. This is the whole reason I use an Apple, the them against us attitude. I don’t think this is an issue with the music industry wanting to make the crappy music cheaper, it’s an issue of them wanting to make the popular music more expensive. All they want is more profit. Period.

    I mainly buy my music from iTunes by the album and if I had to pay more money for the albums, I’d quit buying music online. I’d go back to what I used to do, buy used CD’s then rip them to my computer and take them back to the used cd store, atleast I’ll get what quality I want without having to download it from P2P software.

  4. I disagree with Frank, Jobs is fighting for his customer base. He’s fighting tooth and nail to keep iTunes Music Store at number one. If iTMS was the first to company online to start making the price structure variable it would cause customer confusion, Apple’s core is ease of use. Let some other unknown online music store test the waters with roller-coaster pricing and see how it effects their sales numbers.

    After years and years of price gouging by the record labels, when CD prices should have fallen well under $10 a CD, people are rejoicing in the fact they can actually afford to buy songs they want. If the price were to go back up to over a dollar per track people would leave iTMS by the droves, reinstall their Peer-to-Peer File Sharing Software and start filling their iPods with free music. It’s all economics of the end user. If the record labels are to blind to see that they drove most of the market to piracy after years of price fixing they deserve to have their income capped off for a very long time. Personally I wouldn’t give any record label more than 60 cents a track, flat rate for everyone. The record labels deserve what they’re getting, they didn’t pioneer the industry and they certainly shouldn’t reap the benefits of Apples hard work. I would buy twice as much music on iTMS if I new it would help Apples Quarterly numbers, but I know most of that 99 cents just lines the pockets of another well to do corporate exec.

    Leave the 99 cents alone!
    People buy the iPods knowing they can get the tracks at that price… some would say that an iPod sale constitutes and agreement to honor that price for a good while. (This is where the Fairplay DRM comes into play)

    If the iPod were an open format that you could use with ANY service price competition would be fierce, however; since iPods can only be used with iTMS there is a agreement as a service provider to continue sales based on the information provided at the time of sale.

    Here is the Apples and Oranges version:
    You buy a new car that runs on a exclusive fuel that you can only get from the seller.
    You own the car for a few months and then the seller raises the price of the fuel by 50 percent … but you have no choice to fill your car up anywhere else, your stuck, or sell the car and find something cheeper.

    It’s all economics!

    If the price goes up then you’ll see the sales of iPods skyrocket on ebay.

  5. “crappy” is in the eye of the beholder, isn’t it?

    Personally, I don’t understand Jobs’ stonewalling on this issue. The ITMS is not a huge revenue stream for Apple. It exists mostly to sell iPods and keep people locked into Apple’s FairPlay DRM. So why not do what you can to keep the content providers happy? Why not at least try it?

    Jobs is a personal idol of mine, and I know it’s sacreligious to say so in a venue like this, but it seems like he’s letting his arrogance get the better of him on this one.